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According to a recent announcement, European-based cryptocurrency exchange Bitstamp is set to provide additional insurance cover for assets held by users of its platform.
Bitstamp, one of the oldest cryptocurrency exchanges today made this insurance move so as to wade off fears plaguing cryptocurrency exchanges as it relates to the theft of funds.
Users want security for their money and the promise of being immune to hacks and theft may only make an impression with a novice in the space. The major question exchanges ask is what would the continuity of the platform be in the case of the loss of funds either through internal theft or external hacking while users ask what would be the assurance of recovering their funds in the advent of such mishaps.
Bitstamp Insurance Is an Answer To Stakeholder’s Investment Questions
The stakeholders in this scenario include Bitstamp exchange and the customers who patronize the platform. Bitstamp already has an insurance package that covers cold wallet fund losses and this current insurance is aimed at funds lost through other avenues.
“Digital assets held at Bitstamp either offline or online and covers an array of crime-related cases, such as employee theft, loss while the assets are stored at any premises, loss in transit, loss caused by computer fraud or funds transfer fraud, and loss related to legal fees and expenses,” the exchange noted.
The Bitstamp crime insurance policy is offered by Paragon International Insurance Brokers in Conjunction with Woodruff Sawyer and underwritten by numerous Insurance Companies as well as some syndicates at Lloyd’s of London. As the exchange noted, a large chunk of the assets held on the platform amounting to about 98% is stored offline and has been insured, and the crime insurance package will cover other assets held online as well as those held during transit in a large range of undefined scenarios.
The Bitstamp insurance cover after been expanded to cover both internal and external losses positions the exchange arguably as one of the safest in the industry to date.
What Lack of Insurance Can Stir
The lack of a defined insurance cover can be the bane of any cryptocurrency exchange without one. Besides the competition, it would bring down the level of trust as most users are increasingly getting awareness and would rather patronize such exchanges with a robust insurance cover.
The antecedent by Bitstamp is not the first in the cryptosphere, Coinspeaker reported back in May that Bakkt exchange entered into an insurance partnership with Marsh Insurance to offer a cryptocurrency custody coverage estimated at about $500 million. The Bakkt insurance move further re-emphasizes the importance of insurance covers in the potential retail drive.
KuCoin exchange recently suffered a hack worth $150 million, the company’s initial response was to draw solace from its insurance cover, a position cryptocurrency exchanges aim to solidify as both the adoption as well as the associated risks keep increasing.